Lufthansa Signs Letter of Intent for ITA Purchase

DALLAS - The takeover of ITA Airways (AZ) by the Lufthansa (LH) Group is very close to being finalized, as the German company has signed a letter of intent (LOI) with the Italian Ministry of Economy for the purchase of Italy's largest airline. This LOI would mean that, for the moment, the Lufthansa Group would be willing to buy up to 40% of ITA, valued at between €200 and €300m, according to local media.

In the LOI, the LH Group declared that the entity is starting a period of exclusive negotiation with the government for the "probable capital investment and commercial and operational integration of ITA inside the Lufthansa Group and the synergies that would derive from it."

They continued by saying, "Italy represents the third most crucial market for Germany, shortly after domestic travel and flights to the USA. Our will to integrate ITA Airways relies on the strong interchange of the country on a global level through private and business travel."

Both the Italian Ministry of Economy and LH said that no further information would be shared about the talks.

The Lufthansa Group has slowly taken control of the majority of the Intra-European market with the purchase of neighboring airlines to LH. Render: Lufthansa Group.

Clear Dominance Of The European Market

At the time of writing, the Lufthansa Group is composed of five major carriers: Austrian (OS), Brussels Airlines (SN), Eurowings (EW), Lufthansa (LH), and Swiss (LX). Now, with the imminent takeover of ITA Airways, Europe will be heavily driven into a clear influence by the Lufthansa Group, as it will have tremendous power not only over flights between all the European countries but also abroad.

The German company has designed its operational strategy very well and precisely chooses every function of all carriers inside the group to offer the best possibilities for passengers. LH is the leading premium carrier, which is the global option for travelers and the primary airline to fly to the United States. On the other hand, Brussels Airlines functions as the main airline offering connecting flights from Europe to Central and Southern Africa.

Then, Austrian and Swiss work as hybrid airlines offering different possibilities for travelers with flights to South America and Asia. And finally, Eurowings is the prime low-cost carrier, which offers low fares to more than 200 destinations in Europe and abroad.

With this in mind, the inclusion of ITA Airways would add to the list an extensive route network located in Southern Europe, rich in tourism and leisure flights. This would fit perfectly as a premium alternative to low-cost flights already covered by Eurowings.
Additionally, with the heavy presence of Star Alliance partners such as TAP Air Portugal (TP) or LOT Polish Airlines (LO), and Scandinavian Airlines (SK), every other reachable corner of the world from Europe would end up being covered entirely by the carrier, which would enable it to compete in almost all global markets.

https://airwaysmag.com/lufthansa-submits-offer-to-acquire-a-stake-in-ita-airways/

Featured image: ITA Airways Airbus A330-202 (EI-EJG) at JFK. Photo: Francesco Cecchetti.